Report on the Compatibility of Chinese Laws and Regulations with the Energy Charter Treaty

Report on the Compatibility of Chinese Laws and Regulations with the Energy Charter Treaty

Published in November 2015

Report

The Report was prepared by Prof. Wenhua Shan (Dean and Chair, Xi’an Jiaotong University) during his stay in Brussels as a Fellow at the Energy Charter Secretariat, with the assistance of Peng Wang (former Legal Intern at the Secretariat and a PhD. Candidate at Xi’ang Jiaotong University). It is another step into the deepening of the relations between the Energy Charter and China.

As concluded by the report:

‘Chinese domestic legal framework and its international commitments are already generally compatible with the Energy Charter Treaty (ECT). This suggests that there are little legal costs for China to join the ECT. On the contrary, the ECT should be able to help improve the investment and trade conditions for Chinese investors in existing ECT Member States, particularly in countries that have not yet joined the World Trade Organization (WTO) or countries that still stick to the earlier generation of more conservative investment regimes. It would also facilitate energy transit issues with neighbour countries.

Indeed, Chinese accession to the ECT could well create a "strategic win-win" situation for both the Energy Charter and China: (i) the globalisation plan of the Energy Charter coincides with the recently adopted "One Belt, One Road (OBOR)" initiative of China, while (ii) the Modernisation Phase II of the Energy Charter also resonates with recent Chinese treaty practices. The OBOR is the most significant international initiative put forward by President Xi Jinping and the current leadership. The proposed "Belt", the Silk Road Economic Belt, covers countries that are mostly members of the ECT, whilst the proposed "Road", the 21st Century Maritime Silk Road, extends to Asian, African and Pacific countries that are also targets of ECT membership expansion. With such significant shared interest, the two sides have every reason to closely work together to construct an "Energy Silk Road" that provides better international energy governance for the benefit of not only the two sides, but also the rest of the world.’